Primary Market Risk Is US Dollar and Democratic Congress
Kevin Haggerty is a full-time
professional trader who was head of trading for Fidelity Capital Markets for
seven years. Would you like Kevin to alert you of opportunities in stocks, the
SPYs, QQQQs (and more) for the next day’s trading?
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The major indexes closed up Friday on the lightest NYSE volume
of the week, at 1.36 billion shares. The SPX and $INDU were +.02% to
1409.84 and 12307 while the QQQQ was +0.4% to 43.90. The internals were
neutral, with the volume ratio 53 and breadth only -68. The short-term
overbought condition has worked itself back to neutral as the SPX has remained
at the same price level. The 4 MA’s of the volume ratio and breadth are 50
and -27, so it doesn’t get any more neutral than that. This is a big
option expiration week ending Friday the 15th, so there should be some
volatility. There are many technical and economic divergences, and any
short-term weakness is more likely to occur this week, because the generals are
not likely to let that happen the last two weeks of what is so far an excellent
year, with the SPX +12.9% year-to-date. It will take some significant news
to prevent the generals and hedge funds from blatantly marking up portfolios
into year end.
If there is any weakness this week, the SPX initial minor
support level is 1390 and for the $INDU 12150-12050. The QQQQ initial
levels are 43-42.75 and a close at 43.90. Energy stocks remain a
daytrading focus as the OIH is in a seven day consolidation after a breakout
above the previous 3-week trading range at the .50 retracement level to the bull
cycle 169.75 high from the 10/4/06 118.19 low. The OIH hit a 148.47
intraday high Friday which is +25.6% in 46 days off the 118.19 low.
The primary reason for the equity markets right here is the
$US dollar, as the economy has obviously slowed and the Fed will be hard-pressed
to ease without creating more pressure on the $US dollar, because the two
primary players, China and Japan, are diversifying their $US dollars into euros.
Lest you forget the inverted yield curve, slumping housing market and many
commodity prices still pushing higher. Next on the economic agenda is the
higher tax push and protectionist measures by the Democratic congress, which
will probably be the killing blow to any soft landing. This will also put
an end to the primary bull-cycle trend.
Check out Kevin’s
strategies and more in the
1st Hour Reversals Module,
Sequence Trading Module,
Trading With The Generals 2004 and the
1-2-3 Trading Module.